ABSTRACT
In the economic history of post-independence Africa, Kenya has earned a reputation as one of the best performing and most stable economies. Much development has occurred, price rises have never spilled into hyperinflation, the substantial balance-of-payments difficulties that have occurred have never completely halted the economy. The worst excesses of macroeconomic mismanagement have generally been avoided. Of course, many factors have contributed to this relative success, but the absence of macroeconomic disasters suggests that the classical instruments of macromanagement - fiscal, monetary and exchange-rate policies - have made an important contribution. The purpose of this chapter is to focus on the monetary elements in this package and to enquire into the effectiveness and potentialities of monetary instruments in the Kenyan context.
